A World in Flux

In June President Xi Jinping said that China has been enjoying the best period of development in modern times, while the world is undergoing the most profound and unprecedented changes in a century. The changes Xi mentioned refer to the reshaping of world order and the redistribution of world power between countries and between government and society. These developments have six aspects.

First, there is coopetition between emerging countries and Western powers as well as marked between major countries.

There is now one world superpower and six lesser powers at three different tiers. The US remains at tier one, China, the EU and Russia are at tier two and post-Brexit UK, Japan and India are at tier three. With its strength second in the world and fast growing, China is at risk of attack. The relative rise of Eastern and new powers and the relative decline of Western and old powers, and the advance of China and retreat of the US in particular, has deepened a sense of crisis in the US, which is reluctant to show weakness and has intensified measures to counter Beijing. Increased US pressure on and the encirclement of China and Russia has led to more intense strategic gaming with these two countries in the fields of military, security, geopolitics, and economics, as well as culture through public opinion, diplomacy, and cyberspace, triggering to a certain extent a new cold war. At the same time, the Trump administration has also done its utmost to divide emerging powers to avoid battle on two fronts and attempted to rope in Russia to focus its fire on China.

Second, economic globalization, multilateralism, and global governance have encountered the Trump headwind. As populism makes a great clamor in the US, the Trump administration is obsessed with ‘America First’ and so-called ‘fair trade’ and perverse protectionism. Trade wars against China and even US allies have impacted the multilateral trade regime. China’s economic security and development interests are also challenged.

Third, technology has brought many changes. The whole world is covered by the Internet, with both pros and cons. Cyber security is a big issue. Artificial intelligence will impact life, work, and national security.

Fourth, there has been increased cultural diversity. China has all along advocated and practiced dialogue, exchange, and mutual learning with other civilizations. The effective Chinese model of independence, opening up, reform, and innovation has gained more influence. But this has also created greater political prejudice against China and increased ideological anxiety from Western developed countries, which have hyped up the China threat.

Fifth, there is the growing role of non-state actors. Hi-tech multinational corporations possess amazing capabilities. US companies have obvious advantages while Chinese companies are catching up. Government authority and national security are being eroded and the contemporary international system based on sovereign states is undergoing a profound transformation.

Sixth, crisis has become the norm, with an endless line of black swans and gray rhinos. The IMF warned that the world is over-indebted with a global debt of $164 trillion, bigger than ten years ago when the financial crisis was at its worst and representing 225% of world GDP. There may be another international financial crisis. There seems to be no end to crises in the Middle East and North Africa with the US withdrawal from the Iranian nuclear deal and ongoing contests between Russia and the West. Ethnic conflicts and social differentiation are stirring political crises in Europe and America. President Trump rules by Tweet and is capricious in decision-making. There is the possibility of him flexing muscles externally to divert public attention from domestic difficulties (such as the Russia investigation). Increased populism in Western politics, and Trump in particular, increases instability and uncertainty. As Trump blatantly withdrew from the Paris Agreement, global warming is exacerbated and ecological and environmental crises occur frequently. The abnormally high temperature in the Northern hemisphere this summer has sounded the alarm for mankind.

In short, the world is in transition from the old to a new order. Such a reshaping always risks disorder. As its ‘new era’ coincides with these changes, China is confronted with more complicated challenges.